Srinivasan Venkatakrishnan, CEO ofAngloGold Ashanti Ltd. (AU), said the South African company will not proceed with a previously proposed restructuring plan that would have placed its international operations into a separate company and raised capital. He was speaking at the Denver Gold Forum in Denver, Colorado.
Discussions with shareholders led to the decision to back off, Venkatakrishnan said. Reports indicate that the company’s large debt-to-equity issues and potential dilution of shares were the chief shareholder concerns about the restructuring plan, which would have allowed the company to eliminate its large debt.
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Instead, Venkatakrishnan said, the company will focus on its management approach, address the needs of a simplified portfolio, align its structure with long-term needs, and create separate listings to allow each business to be appropriately valued. AngloGold Ashanti will also seek to strengthen its balance sheet with debt reduction and portfolio sales with particular focus on its Colombian portfolio.
AngloGold operates in Argentina, Australia, Brazil, Ghana, Guinea, Mali, Namibia, South Africa, Tanzania, the United States and Democratic Republic of the Congo. Over 60% of its operations are in Africa.
Significant overhead savings have been realized and maintained, Venkatakrishnan said, with exploration and evaluation costs seeing a total decrease of 74% from Q4 2012 to Q2 in 2014.
Previous investment in projects at the Kibali and Tropicana mines are now delivering competitive ounces, Venkatakrishnan said. Kibali in 2014 has a 550 koz with a total cash cost of $448-$520 oz US. The mines are fueling a return to production growth for the first time in nine years, with Kibali and Tropicana beating guidance.
The company’s greenfield program and underground technology development are also making progress and moving to trial production sites. Exploration is focused on Colombia, Guinea, and Australia.
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